Pakistan’s debt reaches Rs99.6 trillion, SBP data shows

According to State Bank of Pakistan (SBP) data, the country’s total debt increased by Rs5.2 trillion during fiscal year 2024-25.

Pakistan’s total debt stood at Rs94.387 trillion on June 30, 2025. The latest figures show that the country’s debt burden has continued to increase.

The rise comes as the government faces pressure to manage borrowing costs, repay existing loans and control financial challenges in key sectors.

Domestic and external debt rise

The federal government’s domestic debt reached Rs59.441 trillion, according to the central bank’s figures.

Pakistan’s external debt was reported at Rs36.19 trillion by June 2026. Together, these figures highlight the large scale of the country’s financial obligations.

The increase in debt has added to pressure on government finances. A significant portion of public revenue is required for debt servicing, leaving fewer resources available for development and other public needs.

Pakistan also made substantial debt repayments during fiscal year 2026. The total repayments amounted to Rs11.966 trillion, according to SBP data.

Of this amount, Rs4.466 trillion was used to repay the principal on external debt. Another Rs7.266 trillion was paid as interest.

Interest payments remain a major burden

Debt servicing continues to be one of the biggest challenges facing Pakistan’s economy.

Interest payments reached Rs7.266 trillion during fiscal year 2026, compared with Rs9.466 trillion in fiscal year 2025, according to the figures provided.

Although the interest bill declined compared with the previous year, the overall debt remains extremely high. The government must continue managing repayments while also trying to reduce pressure on its budget.

Higher debt levels can limit the government’s ability to spend on infrastructure, education, healthcare and other development priorities.

The situation also increases the importance of improving revenue collection and controlling unnecessary expenditure.

Circular debt adds to IMF pressure

Pakistan’s financial challenges are not limited to government borrowing. The electricity sector’s circular debt remains another major issue as Islamabad prepares for discussions with the International Monetary Fund (IMF).

Review talks with the global lender are scheduled to take place in Pakistan next month. The circular debt is expected to remain an important issue during the discussions.

According to sources cited in the report, the electricity sector’s circular debt is around 130% above the limit agreed with the IMF.

The lender had originally targeted keeping circular debt at Rs1.6 trillion. The significant gap from that target could create additional pressure during the upcoming review.

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Energy prices add to concerns

Sources attributed part of the recent increase in circular debt to higher global energy prices following the US-Iran conflict.

Rising international energy costs can increase the cost of importing fuel and electricity-related inputs. If these higher costs are not fully recovered through tariffs, government support or other mechanisms, the financial gap can increase.

For Pakistan, the energy sector has remained a long-standing source of financial pressure. Problems involving power generation costs, unpaid bills and subsidies have contributed to the accumulation of circular debt.

The government will therefore need to address both the broader debt burden and the structural problems affecting the power sector.